One founder left after a year. Has come back with demand letter for unpaid wages for the year he was with the company.
1. Company incorporated (other founder got 30% of shares on a 4 year vesting): 8/2014
2. Co-founder left: 4/2015 (with about 1/4th of his shares vested)
3. Small claim: 1/6/2016
a. Filed claim for "Unpaid wages via breach of contract"
b. Claimed I owed him $5K/month from 1/2015 till he left but due to small claims limit, asked only for $10K
c. Supporting evidence was that I verbally promised him. Not true.
d. At the small claims court, agreed to dismiss the claim when realized he might lose
4. Sent 1 line email on 1/12/2017 (a little over a year from last claim): "It looks like <company name> might finally be in a position to pay me. Is that the case?". I didn't respond.
5. Sent demand letter on 2/11/2016
"I am now writing again in regards to the unpaid wages still owed to me by <company name> for my time spent working for the company as a full time employee."
[Calculation based on minimum wage to show he needs to be paid 14K to be paid by 3/15/2017]
Because there may be many pertinent questions that need to be addressed, I suggest you meet with an attorney to determine whether there is any real liability. Do not disregard this and hope it goes away.
You should consult with an employment law attorney and have your attorney respond to the letter with an attempt to resolve the matter before you get sued in Superior Court (not small claims.) Your fee to an attorney is a tax write off for your business. Many of us offer phone consultations for convenience. Find contact info on Avvo.com. If he has a valid wage claim, your company could be subject to pay the unpaid wages plus 30 day's pay plus HIS attorneys' fees (and your own.) if the matter is not resolved.
This is a common issue / dispute that often arises between co-founder. You should discuss this with an experience employment attorney, who can help you determine whether a co-founder was an employee, and if so what the proper compensation should be.
San Francisco Employment Lawyer
First, I would remind you and all others who post questions on AVVO that you should not expect, nor is this site designed for, any meaningful legal advice that can be relied upon. There is no attorney-client privilege and the information you provide isn't enough for a qualified attorney to ethically provide advice. However, what you should expect is some general direction and tips to lead you in the right direction. Also, since you are in California, I would strongly recommend that you only consider any suggestions posted by California licensed attorneys who practice law in California and who are in the specific area of law regarding your question. Lastly, solicitation is against ethical standards that govern how lawyers are to behave. California attorneys are not allowed to solicit business (except with relatives or with those with whom we already have a preexisting business relationship) which is why you should never see a lawyer directly asking you for a consultation or your business. It is purely your prerogative if, when, and with whom you choose to do a consultation.
You have a few choices in these type of circumstances.
1. You can ignore and hope it goes away. This is a gamble that can work if you're lucky with no out of pocket expense but if you're wrong could cost you more than it would have to address it early (must like most of life's problems, addressing problems early is usually the best solution).
2. Hire a lawyer to look over your stuff and give you his/her professional advice on your circumstances and lay out your options. He/she will need to review your case, files, documents, etc. This is probably a fairly inexpensive first step. At least you'll have a professional opinion about your options, costs, and expected strategies instead of you just hoping and guessing.
After the lawyer lays out your options for you, you can choose your next step with all of your questions answered. Probably worth the small fee you'll pay for the advice.
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